India: Bharat Petroleum Monitors Expenditure

The company has shelved smaller expansion plans worth a collective Rs 1,000 crore. “This fiscal, we were originally planning to spend Rs 2,500 crore in smaller projects including LPG. We have now decided to spend just Rs 1,500 crore to cut down on unnecessary expenditure,” Ashok Sinha, CMD, BPCL, told Flocal media. This is apart from the company’s plans to drastically slow down the expansion of its retail business. It would add only around 200 retail outlets this fiscal, compared to over 700 a couple of years back.

Clarifying that the company, however, would go ahead with all its planned capital expenditure including the completion of its Bina refinery, Sinha said that these expansions cannot suffer since they were of strategic nature and essential for the company’s growth. “But there are other smaller expansion plans we can afford to delay as of now,” he said.

Saying that the global financial turmoil has not yet had an impact on the company’s capital raising plans, Sinha said that the company is, however, conscious not to spend where it is not needed urgently. The company’s under-recoveries in the first three months of the current fiscal stands at Rs 3,100 crore. While the recent softening of crude prices has not helped much to cover losses on the sale of petroleum products, the company is looking forward to oil bonds from the government to compensate for the losses.

BPCL’s director-finance SK Joshi said that the company would go ahead with its planned capex but at the same time, keep projects where finances have not been tied up already, on the backburner.

Justifying the move to go slow on the company’s retail expansion plans, S Krishnamurti, executive director (retail) said that the company would examine ways to increase the per capita offtake from the petrol pumps, and thus compensate for the loss in revenues it would otherwise incur.

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